The US will want to protect its phase-one trade deal with China even as tensions flare, Morgan Stanley says



Ben Winck | Markets Insider

The White House won’t easily give up on its phase-one deal with China despite new fears of a revived trade war, a Morgan Stanley economist said Friday.

The two economic superpowers kicked off a new stage of tit-for-tat measures through the first week of June. Chinese government officials told businesses to halt imports of some US agricultural products on Monday, threatening a key element of the January deal. The White House on Wednesday banned Chinese airlines from operating passenger flights to the US after accusing China of implementing a similar prohibition.

Investors and economists are growing increasingly worried the actions could spark a new phase of the global trade conflict, but Morgan Stanley said it believes the stressors will fade as each nation prioritizes its own recovery from the coronavirus pandemic.

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